Correlation Between Metalurgica Gerdau and United Rentals
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and United Rentals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Metalurgica Gerdau and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalurgica Gerdau SA and United Rentals, you can compare the effects of market volatilities on Metalurgica Gerdau and United Rentals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Metalurgica Gerdau with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and United Rentals.
Diversification Opportunities for Metalurgica Gerdau and United Rentals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metalurgica and United is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Metalurgica Gerdau is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Metalurgica Gerdau SA are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and United Rentals go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and United Rentals
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 3.73 times less return on investment than United Rentals. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 1.45 times less risky than United Rentals. It trades about 0.06 of its potential returns per unit of risk. United Rentals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 11,898 in United Rentals on September 1, 2024 and sell it today you would earn a total of 6,715 from holding United Rentals or generate 56.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. United Rentals
Performance |
| Timeline |
| Metalurgica Gerdau |
| United Rentals |
Metalurgica Gerdau and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and United Rentals
The main advantage of trading using opposite Metalurgica Gerdau and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, United Rentals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Rentals will offset losses from the drop in United Rentals' long position.| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
| United Rentals vs. Localiza Rent a | United Rentals vs. Vamos Locao de | United Rentals vs. Movida Participaes SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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